With help from Andrew Restuccia, Darius Dixon, Erica Martinson and Darren Goode

KEYSTONE REPORT COMING AS SOON AS TODAY, SOURCES SAY: The State Department is set to release a final environmental analysis of the proposed Keystone XL oil pipeline as soon as today, according to several sources, setting the stage for a months-long endgame in one of the Obama administration’s most intractable environmental controversies. A State Department official told POLITICO that the report will be released “soon.” The department has repeatedly concluded — most recently in a draft study in March — that the pipeline would pose little environmental risk, despite sharp objections from climate activists and some scientists. Andrew Restuccia previews the big news: http://politi.co/1frSA0D

Story Continued Below

— Bloomberg reported last night ( http://bloom.bg/1nt7A1Z) that the new report “will probably disappoint environmentalists and opponents of the Keystone pipeline, according to people who have been briefed on the draft of the document.” But other sources were unable to confirm that late Thursday night.

Remember: The environmental analysis is not the last step. The State Department still has to study whether it is in the national interest.

Speaking of TransCanada: New documents show TransCanada did not disclose its previous work with the contractor ERM that the State Department hired to conduct an environmental study, Buzzfeed writes: http://bzfd.it/1eAPPpU

Meanwhile, in Canada: Canada's National Energy Board, which regulates the nation's big pipelines, yesterday recommended the government approve Enbridge's $1.6 billion plan for an oil pipeline linking Edmonton to a storage hub 113 miles away. The pipeline is in the national interest, the board concluded, so long as Enbridge takes certain environmental protection precautions. Reuters: http://reut.rs/1ifFUue

SPEAKING OF EXECUTIVE ACTION… President Barack Obama has been looking for regulations and other executive actions he can use to bypass a stalled Congress — but that’s nothing new for his administration. POLITICO has a great, in-depth package today looking at the administration’s executive agenda. Here are the must-read items for energy wonks:

Some climate work takes place under the radar: Obama’s environmental regulators will spend the rest of this year writing climate rules that would reshape the nation’s electricity supply, throw a cloud over the future of coal power and take the biggest stride ever in throttling the nation’s greenhouse gas pollution. And that’s just the beginning. Some of the administration’s climate work is taking place under the radar, in ways few Americans would notice until the impacts ripple through the economy. One example: Last year, the administration quietly rejiggered a wonky calculation known as the “social cost of carbon” in a way that will make it easier to justify the economic burdens of a wide range of climate regulations. Erica Martinson has the story: http://politi.co/1a5WgoX

Trade another front on climate change: Obama could take significant steps on climate change indirectly through major trade proposals. Environmental protections are a big focus of three massive trade agreements the White House is pursuing. Environmental groups oppose controversial provisions in those deals that would let corporation sue governments before private tribunals over laws that cut into their profits. But the White House does appear to be standing firm, if standing alone, on environmental protections in the Trans-Pacific Partnership talks, which the administration hopes to wrap up this year. Matthew Korade has more: http://politi.co/1fDJtb9

Moving on cybersecurity: Gridlock on the Hill when it comes to tech issues, including cybersecurity, have helped Obama take big steps in that arena. The president last year issued an executive order almost one year ago that has the government and industry collaborating on new, voluntary standards. It got little attention at the State of the Union, but the administration is inching closer to new standards and regulations that could have major impacts on electric utilities, pipeline operators and other critical infrastructure. Tony Romm has more: http://politi.co/1gxjsz7

THANK FARNSWORTH IT’S FRIDAY and welcome to Morning Energy, where we’d like to with a happy 97th birthday to one great-grandmother and a (slightly belated) happy 94th birthday to another great-grandmother. Your morning host comes from a long line of awesome women. Send your energy news to aguillen@politico.com, and follow on Twitter @ alexcguillen, @ Morning_Energy and @ POLITICOPro.

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OBAMA NOMINATES NEW FERC CHAIRMAN: The president has nominated FERC enforcement chief Norman Bay to be the agency’s next chairman. This is the White House’s second attempt to pitch a replacement for former FERC Chairman Jon Wellinghoff after the nomination of former Colorado utility regulator Ron Binz ran aground in the Senate Energy and Natural Resources Committee last year. Bay, whose name has been circulating in Beltway rumor mills since Binz withdrew, is a quiet operator who spends his day taking on energy market manipulation and wrongdoing, which has made him a popular figure on Capitol Hill, particularly with Democrats. Darius Dixon has more: http://politi.co/1loM0gx

GOP aide: ‘Why not a sitting commissioner?’ A spokesman for Sen. Lisa Murkowski, the top Republican on the Energy and Natural Resources Committee that will vote on Bay's nomination, said she has not had time to completely review Bay. But spokesman Robert Dillon said that it is “noteworthy that the president has chosen to elevate to the post of chairman — over clearly qualified commissioners — a FERC employee who has not served on the commission.” Chairman Ron Wyden’s office declined to comment on Bay’s nomination.

— The American Energy Alliance, one of the groups that investigated Binz and contributed to his nomination's ultimate failure, will likely turn its eye to Bay now as well. AEA President Thomas Pyle said yesterday the he is “hopeful that his confirmation process will leave no stone unturned.”

AND SOME OTHER NOMINATIONS: Ann Dunkin, to be EPA’s assistant administrator for environmental information, which handles EPA’s IT; Miranda Ballentine, to be assistant secretary for installations, environment and logistics for the Air Force; Reggie Brothers, to be undersecretary for science and technology at the Department of Homeland Security; and Manny Ehrlich, to be a member of the Chemical Safety and Hazard Investigation Board.

CSB SAYS LAX RULES LED TO TESORO EXPLOSION: “Tesoro Corp.'s lax safety standards led to the April 2010 explosion at the company's Washington refinery that killed seven workers, and the incident calls into question a long-time industry method for predicting accidents, a federal safety watchdog said Thursday. … The unit that eventually exploded had a long history of frequent leaks and occasional fires, particularly when it was being restarted after maintenance work, according to the report. To predict equipment trouble, the company relied too much on engineering models and too little on physical inspections, the board said. … The board said that Tesoro has improved safety standards since the accident but, in findings that could have a broader impact, it criticized the refining-industry standard used to predict ruptures in certain types of steel.” WSJ: http://on.wsj.com/1iS4WCq

WAXMAN LEAVING RICH LEGACY: Much of Washington reeled yesterday when longtime Rep. Henry Waxman announced he won’t run for another term this fall. But Waxman will leave behind quite a legacy from his 20 terms in the House, from environmental issues to his watchdog role during the later years of the George W. Bush administration. Waxman was key to moving President Barack Obama’s health care law in the House, but his eponymous cap-and-trade bill cleared the House only to die in the Senate. But Waxman’s history with clean air issues — work for which Obama and Al Gore praised him Thursday — extends back much further than 2009. Darren Samuelsohn and Joanne Kenen have the story: http://politi.co/1jPz69q

ZONING OUT: Two days after the White House pitched it as part of President Barack Obama’s State of the Union agenda, people are still puzzled about what “sustainable shale gas growth zones” are supposed to be. The phrase is one of a handful of new energy-related proposals outlined in a White House fact sheet issued Tuesday. But the White House has declined to offer any additional details about the proposal. And people who work in or with the natural gas industry say they’re at a loss on what the administration is talking about. Talia Buford has the story: http://politico.pro/1fgf3v6

IRS NEEDS SYSTEM TO IDENTIFY 1603 RECIPIENTS WHO CLAIM TAX CREDIT — IRS WATCHDOG: The IRS needs to set up some system to identify recipients of 1603 renewable energy grants who thus cannot also claim the investment tax credit the company would have received, the Treasury Inspector General for Tax Administration says in a newly released report. The 1603 grants were intended to help renewable energy developers bypass the weakened private tax equity market by offering the cash value of what the project would have received from the ITC later on — but grant recipients were barred from claiming the tax credit later on. The program, which expired at the end of 2011 but is still active due to generous safe harbor provisions, was quite popular, with more than $18.5 billion in grants as of May 2013. An ongoing compliance review being conducted by the IRS has “identified significant issues” with a large ratio of 1603 recipients that have been sampled so far. However, it is unclear at present whether any of those cases involve a grant recipient also claiming a tax credit. The report, dated Dec. 17 but posted online yesterday: http://1.usa.gov/1fg12h0

COAL MINING RULE GOES TO COURT: A lawsuit brought by the National Parks Conservation Association and other groups over a controversial coal mining rule will get its day in court today. Judge Barbara Rothstein of the U.S. District Court for the District of Columbia will hear arguments, with the green groups arguing that the 2008 stream buffer zone rule weakened environmental protections from surface mining that were set up in a 1983 rule and should thus be vacated. The groups sued in 2009, but put the proceedings on hold for several years in the hopes that the Obama administration would re-write the rule. The Interior Department, however, is still working on its re-write, and the groups ran out of patience and reopened the issue last year. The National Mining Association has intervened alongside the administration to defend the 2008 rule. The hearing is at 10 a.m. Each side has 30 minutes, plus 10 minutes for a rebuttal from the green groups. Both sides, the court ordered, should argue whether the 2008 rule should be vacated, and attorneys should address a related Endangered Species Act dispute.

OBAMA, GORE CHAT: President Barack Obama met with Al Gore Thursday during a stop in Tennessee, according to a White House official. But the official declined to give details on their conversation. A Gore spokeswoman also declined to comment on the meeting.

MORNING WATCH: What conference would be like in real life: http://bit.ly/1jJIwAK (h/t AWEA’s Peter Kelley)

BOXER THREATENS TO SUE NRC: Senate Environment and Public Works Chairwoman Barbara Boxer gave the NRC leadership a tongue-lashing Thursday, saying she’s open to taking the agency to court for not turning over documents related to Southern California Edison’s now-shuttered San Onofre nuclear plant. Darius Dixon has more: http://politico.pro/1jQ3dxJ

Related: Today marks the two-year anniversary of the leak that led to San Onofre’s shutdown. KPBS: http://bit.ly/1khJ4OC

GETTIN’ REGGY WITH IT: Our new tipsheet on regulation issues in the energy world is back for its second edition today. Until it hits your inbox, visit our interactive regulation tracker: http://politico.pro/JY0iDN, or sign up at the settings page: http://politico.pro/1bCSF0e

FROM ME’S MAILBAG

Nominations: Sen. David Vitter wants Interior nominee Rhea Suh says her response to his question about departmental contracts was insufficient, and he wants more details: http://1.usa.gov/1kePv5d

Solar: Former Duke Energy CEO and Edison Electric Institute Chairman Jim Rogers should convince his former company and trade group to embrace rooftop solar, The Alliance for Solar Choice writes: http://prn.to/1jOAp8J

QUICK HITS

— Former New York City Mayor Michael Bloomberg has been tapped to be the United Nations' special envoy for cities and climate change, sources tell Reuters: http://reut.rs/1loKZVy

— Workers are trying to stop natural gas from flowing from an out-of-control well off the coast of Louisiana. Bloomberg: http://bloom.bg/1eBNUkG

— Wyoming will spend at least another $400,000 on water deliveries for Pavillion-area residents with polluted groundwater. AP: http://bit.ly/1loZ71e

THAT’S ALL FOR ME. Have a great weekend.

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CORRECTION: A previous version of this tipsheet misstated the findings of a Treasury Inspector General for Tax Administration report. The report did not conclude that any recipients of a 1603 grant later claimed the investment tax credit.

Authors:

About The Author

Alex Guillén is an energy reporter for POLITICO Pro, where he covers EPA, regulations and coal, as well as lobbying and campaign finance in the energy realm. He previously wrote the Morning Energy newsletter. He graduated from the College of William and Mary in Williamsburg, Va., with a degree in anthropology and English. He is an avid reader and TV binger. The Delawarean, thrilled that there are finally Capriotti’s outposts in Washington, lives in Alexandria, Va.